Forensic accounting involves looking beyond the numbers and grasping the substance of situations. Due to the nature of a forensic audit, it can accurately be described as part accounting, part auditing and part detective work. Specifically, the two main areas forensic audits encompass are litigation support and investigation.

Litigation support represents the factual presentation of economic issues related to existing or pending litigation. In this capacity, forensic accounting professionals quantify damages sustained by parties involved in legal disputes and assist in resolving disputes – even before they reach the courtroom. If a dispute does reach the courtroom, the forensic accountant may testify as an expert witness.

Investigation is the act of determining whether criminal matters such as employee theft, securities fraud (including falsification of financial statements), identity theft and insurance fraud have occurred. As part of the forensic accountant’s work, he or she may recommend actions that can be taken to minimize future risk of loss. Investigation may also occur in civil matters. For example, the forensic accountant may search for hidden assets in divorce cases.

The level of evidentiary detail and precision forensic accountants employ may also be applied in "positive" assurance engagements. These include due diligence reviews, business valuations, audit committee advisory services and enterprise risk management.

In short, forensic accountants are employed to seek, interpret and communicate transactional and reporting-event evidence in an objective, legally sustainable fashion. They must do so not only in situations where there are specific allegations of wrongdoing, but also in situations where interested parties judge the risk of loss from wrongdoing to be sufficient to require evidence that no wrongdoing is actually occurring.

Let MFR put our forensic audit skills to work for you today.

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